ECB slashes growth forecasts yet Noyer pledge eases woes

I am City A.M's deputy editor, having joined the newsroom in late 2010 as an economics reporter.

Follow Julian

Julian Harris

THE EUROPEAN Central Bank (ECB) slashed its growth forecasts for the Eurozone yesterday, with governing council member Christian Noyer pledging to reduce borrowing costs for struggling member states.

The single currency area will see output shrink by 0.3 per cent this year, the ECB expects, down from the previous estimate of a 0.2 per cent contraction.

And even next year the Eurozone will grow by only 0.6 per cent, the ECB said, slashing its previous forecast of one per cent expansion.

The central bank now expects inflation to be more restrained, however.

Noyer attempted to boost sentiment. “Don’t have any doubt about the determination of the governing council and its capacity to act within the terms of its mandate,” he told Le Point magazine. “Our operations will be of sufficient size to have a strong impact on the markets. We should be ready to intervene very soon, prioritising short-term debt markets.”

In crisis-hit Greece, unemployment climbed to 23.1 per cent in May, data showed yesterday, while a separate survey from totaljobs.com found that Greeks looking to move abroad for work find the UK more attractive than any other destination country.

Meanwhile, the OECD released forecasts showing that growth in Russia, India and China are set to slow, indicating the extent of the global economic slowdown which is largely blamed on the Eurozone crisis.